• Sunday, December 03, 2023
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Norfund invests $12m in Nigeria’s cocoa industry

Norfund invests $12m in Nigeria’s cocoa industry

Through an investment of $12 million in OH Ecosystems Ltd (Eco), the Norwegian Investment Fund (Norfund) for developing countries will contribute to addressing some challenges in the Nigerian cocoa value chain.

Eco which builds and operates cocoa processing and confectionery businesses in Africa has recently acquired a majority stake in FTN Cocoa Processors Plc – Nigeria’s listed cocoa company.

The Norfund’s investment will support Eco to upgrade FTN’s operating facilities and extend its reach to produce and sell additional products into the cocoa supply chain.

Before this investment, FTN had been dormant and underutilised for several years.

“Increasing the share of raw materials that are processed locally can create a large number of jobs that provides the fast-growing population of Nigeria an opportunity to work their way out of poverty,” Obafemi Awobokun, investment manager at Norfund said in a statement.

“We are confident that this investment can contribute to this,” Awobokun said.

Norfund’s investment will help create both technical and non-technical employment directly for 600 people and indirectly for more than 1,500 across the cocoa value chain.

The investment also contributes to the Nigerian government’s efforts to diversify export revenues by reducing its reliance on crude oil.

With 20,000 metric tons of installed capacity, FTN processes raw cocoa beans into semi-finished products (cocoa liquor, butter and powder) for commercialization to global and local clients.

“This is a strategic alliance comes through that will help FTN sew up her pursuit of conversion of cocoa beans, job creation, contribution to the economic diversification goals of the government, delivering value to stakeholders and actualising the vision of being a global player,” said Akin Laoye, managing director of FTN.

As part of the partnership, Norfund will support Eco’s efforts in establishing a sustainable supply chain through its farmer empowerment programme dubbed ‘EcoWise’.

The programme seeks to address farmer poverty, which is one of the root causes of child and forced labour in the cocoa value chain.

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Eco has partnered with industry experts to establish a farmer-focused program that ensures fair compensation, improved extension services, and training for farmers working with Eco’s operating units.

The program has been previously piloted in Ghana.

“This investment also presents us the opportunity to partner with these stakeholders to increase local processing of cocoa beans and thus capture more of the value chain dollars at origin, to create jobs and to positively impact the fight against child and forced labour and deforestation in this important value chain,” Naana Winful Fynn, regional director for West Africa at Norfund said.

The investment directly supports the increase of local, value-added transformation leading to quality job creation, local tax revenues, and foreign exchange for West Africa’s cocoa-producing countries.

The investment furthers Norfund’s strategy to help create sustainable, scalable businesses in Sub-Saharan Africa that promote value addition at the origin.

“We are thankful for Norfund’s partnership as we focus on building out value-add production in Nigeria,” Nathaniel Durant, managing director of Eco said.

“Having partners who are aligned over the long-term on both the financial and social impact of our work is extremely important.

“Together, we can contribute to Nigeria’s agricultural manufacturing with a focus on financial sustainability for farmers in the value chain.”

Nigeria is the fourth largest producer of cocoa globally with 290,000MT in 2021 behind Cote dÍvoire, Ghana, and Cameroon. However, less than 10 percent of its cocoa is processed, with over 90 percent exported raw with no significant value addition.